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Big Court Decisions Coming Soon for Hotfile, Vimeo

The responsibilities of websites to deal with copyright will be further shaped by two judges in the near future.

Vimeo Logo - H 2012

It's been five months since the 2nd Circuit Court of Appeals revived Viacom's lawsuit against YouTube and handed down a major ruling on the liability of websites which host copyrighted material. In the immediate aftermath of that decision, both Viacom and YouTube were quick to proclaim some victory as legal observers fussed over how to make sense of a decision notable for its vagueness on such sensitive ground as an ISP's “right and ability to control” infringing activity under the safe harbor provisions.

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The next wave of big copyright decisions will probably be coming in a matter of weeks. In two cases -- one involving cyberlocker Hotfile and the other involving UGC site Vimeo -- judges are being asked to interpret what the 2nd Circuit said in Viacom v. YouTube and apply it to analogous situations.

In the Hotfile lawsuit, the major Hollywood studios are looking to score a big summary judgment victory against a cyberlocker that it perceives as "more egregious" than Napster and "indistinguishable" from Megaupload.

At the end of Aug., the parties had a hearing before Florida federal judge Kathleen Williams, and the plaintiffs including Disney and Warner Bros. followed it up with a memorandum intended to stress some key points.

According to the memo, the studios say that "Hotfile is ineligible for DMCA safe harbor" -- the portion of the Digital Millennium Copyright Act that allows internet service providers to escape copyright liability if they follow certain conditions --"because it failed to reasonably implement a repeat infringer policy."

Hotfile is said to have received 8 million infringement notices from copyright owners, including the identification of nearly 25,000 "blatant repeat infringers," and Hotfile allegedly terminated just 43 users thanks to lawsuits or threats of litigation. The Hollywood plaintiffs also say that Hotfile's revenue fell by 94 percent when Hotfile was forced to begin terminating repeat infringers as a result of this lawsuit, and that 90 percent of Hotfile downloads were of infringing content.

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"Eight million infringement notices, together with the other ample evidence of Hotfile’s knowledge of pervasive infringement, more than establish sufficient constructive knowledge for purposes of common law contributory copyright infringement," continues the memo.

The studios point to the YouTube ruling, which it reads as disqualifying a service provider from being shielded from inducement liability over the issue of "control" of a system. "Plaintiffs have already demonstrated that Hotfile both has the ability to control infringement on its system and receives a financial benefit from that infringement," say the plaintiffs. "Thus, if the Court finds that, in the post-Complaint period, Hotfile continued to induce infringement, Hotfile would not be eligible for DMCA safe harbor."

Read the full memorandum here.

For the flip side, how ISPs are reading the YouTube decision to find a legal advantage, turn to what Vimeo is saying in a different case.

In New York, Vimeo is being sued by the major record labels for infringing copyrights on sound recordings, particularly in regards to "lip dubs," where users choreograph elaborate lip synching spectacles to popular music. The lawsuit was actually delayed pending the outcome of the appeal in Viacom v. YouTube, and now that the decision has come out, the UGC service made a motion on Friday for a summary judgement ruling to dismiss the plaintiffs' case.

"Plaintiffs have advanced a number of theories in support of their copyright claims, including the notion that service providers like Vimeo must affirmatively monitor all content uploaded by their users and remove supposedly infringing content before even being requested to so do," says Vimeo in its motion. "But the courts—including recently the Second Circuit in Viacom Int’l Inc. v. YouTube, Inc., have repeatedly held that the DMCA does not require a service provider to do any such thing."

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Vimeo, which has more than 12 million registered users, says that it has a system that allows others to report videos for suspicions of violating terms of service, that it has automated tools that identify and remove content that does not comport with website policies, and has a staff that manually reviews flagged videos. The company also says it has implemented a policy for terminating the accounts of repeat infringers.

In the original lawsuit, filed in 2009, the record companies identified 199 videos that were allegedly infringing. Several months later, the plaintiffs amended their legal papers to add more than 1,000 additional infringing videos. Vimeo says that in both instances, the information prompted them to remove the videos within 48 hours.

Nodding to the recent appellate decision in the YouTube case, Vimeo asserts that "mere generalized knowledge" of likely infringing activity is not cause to deny safe harbor. Vimeo says that it can't be punished for any infringements that it is not specifically told about. The company says that users upload 43,000 unique videos each day and that its database now contains more than 31.7 million videos. To require constant attention would bring the service to a "grinding halt," it says. Further, it says that it isn't in position to determine whether material is protected by copyright.

"Many recording artists, musicians, and bands have Vimeo accounts through which they post videos containing music," says the motion. "Indeed, Plaintiffs’ own artists have posted videos on Vimeo containing the very same songs that Plaintiffs have complained about."

And as for the "right and ability to control" infringing activity -- which Hollywood studios hope to use to disqualify Hotfile from any safe harbor defense -- Vimeo has its own interpretation.

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"The right and ability to control allegedly infringing activity focuses on a service provider’s legal and practical control over the specific infringing activity at issue," it says in the motion. "The mere ability of a service provider to remove content after it has been uploaded is insufficient as a matter of law to establish the right and ability to control the infringing activity required by [the DMCA's safe harbor provisions]. Indeed, to hold otherwise would eviscerate the DMCA’s safe harbor protections by imposing liability on service providers for the very act of complying with the DMCA’s provisions in taking down infringing content."

Vimeo concludes by telling New York federal judge Ronnie Abrams that it can't control what its users post and calls pre-screening of content "an impossible task."

Read the full motion.

Decisions in both court cases should be forthcoming very soon. It's one thing to get a big opinion like what happened in April in the YouTube case. It's another to see how judges interpret the new standards.

E-mail: eriq.gardner@thr.com; Twitter: @eriqgardner